Edouard Carmignac's letter

Dear investors,

The philosopher Karl Popper wrote, “Optimism is a duty.” His thinking encourages opening oneself to the future and reminds us of our shared responsibility to cultivate it through our actions. Rather than prophesying evil, we should strive for a better world.

As investors, we are confronted with a veritable “feast of fears”. Whether it be the imminent bursting of the artificial intelligence “bubble”, the resilience of Vladimir Putin’s regime and his inevitable victory over Ukraine, and China’s inescapable grip on Taiwan…

Yet in-depth analysis of the various forces at play allows us to envisage scenarios in which the future is far more uplifting:

• Augmented Intelligence - wrongly designated “artificial”- will usher in a formidable technological acceleration, the likes of which humanity has never experienced. By stimulating productivity and creativity, AI is becoming a powerful engine of discovery in multiple fields, from physics to biotechnology and renewable energy production;
• The fall of corrupt authoritarian regimes that engage in massive misappropriation of resources for the benefit of a ruling clique and finance acts of subversion beyond their borders. Like Venezuela, Iranian leaders have, for close to fifty years, retained control of the country’s oil resources and profoundly destabilized the Middle East, at the cost of a deep repression of its people. The simultaneous collapse of these two regimes allows us to picture a sharp correction in hydrocarbon prices which would significantly erode Putin’s power.
• The inevitable evolution of the Chinese model. Having made its market difficult to penetrate through a series of protectionist measures, having limited its depth by curtailing the purchasing power of its middle class, China has embarked on a campaign to conquer foreign markets on all fronts. This predatory policy has no future. Significant tariff increases have made access to the US more difficult, and the Trump administration has now complicated China’s rush into South America. Chinese companies are attempting to storm the European market, where our authorities, often slow to react, are finally beginning to respond. The foreseeable weakening of the Russian market should prompt further the Chinese government to revitalise domestic consumption. A shift that will have to be conducted with a significant political liberalisation.

Excessive optimism on my part? Perhaps. But was I too optimistic last April when I predicted the impact of the “Milei wave” on the revaluation of South American assets, or last July, when I anticipated the impact of the weakening of the Irani Mullahs on the Middle East?

Contrary to what alarmist short-term headlines may have us believe, the future could be bright. In this spirit of optimism, I wish you the best for the year ahead,